The purpose of this paper has been to document and discuss the value of ThyssenKrupp AG corporate according to figures from the annual report of the fiscal year 2014/2015 and popular financial websites using three methods DCF Method (WACC), DCF Method (Equity) and Multiples Method to come out with a fair value of the company. This value represents the price at which the holders of the company can sell or the buyers can buy it.
The valuation results will be compared to the Peer Group Companies in order to figure out whether the Company is overvalued or undervalued. This paper also discusses the Advantages and the Disadvantages of each method where one method is not sufficient to give a fair value of the company.
Business valuation is a process aimed at estimating the fair economic value of a business by analysts or investors to determine the price at which the owner can sell or the investors can buy a specific business. Valuation is also used to determine the share´s value by the investors in order to decide whether to buy or sell, to take strategic decisions by the owners regarding existence of a business to sell, merge, milk or buy another business, and to measure the company´s policies and strategies impact on value creation and destruction.
The complication in valuing a business comes from the variety of methods such as DCF Method (WACC), DCF Method (Equity) and which are not created equal and thus, they come out with different values which measure different components of capital structure. DCF methods are based of forecasting date for years forward and that requires lots of predictions and assumptions of the business performance in the future so that any change will lead to different company´s value.
But in the other side, DCF methods are the most important and powerful used by professionals and investors over the world and employed for a wide range of tasks. While the Multiples are based on the comparison with other similar companies in order to determine whether the company or the share overvalued or undervalued.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 1.1. Description of Valuating a Corporate and Complication
- 1.2. Scope of Work
- 2. ThyssenKrupp
- 2.1. History and Overview
- 2.2. Financial Situation
- 2.3. Peer Group Companies
- 3. Valuation Methods
- 3.1. Valuing the Company via DCF-Entity
- 3.2. Valuing the Company via DCF-Equity
- 3.3. Valuing the Company via Multiples
- 4. Critical Assessment
- 5. Outlook and Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
The objective of this paper is to determine the fair value of ThyssenKrupp AG using three valuation methods: Discounted Cash Flow (DCF) method (using both entity and equity approaches) and the Multiples method. The results will be compared to peer group companies to assess whether ThyssenKrupp is overvalued or undervalued. The analysis will also explore the advantages and disadvantages of each valuation method, highlighting the importance of a multi-method approach for a comprehensive valuation.
- Corporate Valuation Methods (DCF and Multiples)
- Application of Valuation Methods to ThyssenKrupp AG
- Comparison of Valuation Results to Peer Group Companies
- Critical Assessment of Valuation Methodologies
- Advantages and Disadvantages of Different Valuation Approaches
Zusammenfassung der Kapitel (Chapter Summaries)
1. Introduction: This chapter introduces the concept of business valuation, explaining its purpose and the complexities involved. It highlights the challenges of using various valuation methods, such as the DCF (WACC and Equity) and Multiples methods, which can yield differing results due to the varying components of capital structure and reliance on future predictions. The chapter emphasizes the importance and widespread use of DCF methods despite their dependence on assumptions and forecasts, contrasting this with the comparative nature of the Multiples method. It sets the stage for the subsequent analysis of ThyssenKrupp AG, outlining the scope of the work and the chosen valuation approaches.
Frequently Asked Questions: ThyssenKrupp AG Valuation
What is the main objective of this document?
The primary goal is to ascertain the fair market value of ThyssenKrupp AG by employing three distinct valuation methods: Discounted Cash Flow (DCF) analysis (both entity and equity approaches), and the Multiples method. The resulting valuations will be benchmarked against peer companies to determine if ThyssenKrupp is overvalued or undervalued. The analysis also critically evaluates the strengths and weaknesses of each method, underscoring the benefits of a multi-method approach for a thorough valuation.
What valuation methods are used in this analysis?
The analysis utilizes three key valuation methods: Discounted Cash Flow (DCF) analysis (using both the entity and equity approaches), and the Multiples method. Each method's results are compared and contrasted to provide a comprehensive valuation.
What is the scope of the analysis regarding ThyssenKrupp AG?
The analysis encompasses a detailed examination of ThyssenKrupp AG, including its history, financial standing, and a comparison to its peer group companies. The analysis goes beyond simply applying valuation methods; it critically assesses the results and the methodologies themselves.
How are the results of the valuation methods compared?
The valuations obtained from each of the three methods (DCF-Entity, DCF-Equity, and Multiples) are compared to one another. Furthermore, the findings are compared to valuations of peer group companies to determine if ThyssenKrupp's valuation is justified in relation to its competitors.
What are the key themes explored in this document?
The key themes include: various corporate valuation methods (DCF and Multiples), application of these methods to ThyssenKrupp AG, comparison of valuation results to peer companies, critical assessment of the methodologies, and a detailed examination of the advantages and disadvantages of each valuation approach.
What does the introduction chapter cover?
The introduction chapter lays the groundwork by defining business valuation, detailing its complexities, and highlighting the challenges inherent in using different valuation methods (like DCF and Multiples). It explains why DCF methods are widely used despite their reliance on assumptions and forecasts, contrasting this with the comparative nature of the Multiples method. Finally, it outlines the scope of the analysis and the chosen valuation approaches for ThyssenKrupp AG.
What topics are covered in the chapter on ThyssenKrupp?
This chapter provides a company overview including the history and financial situation of ThyssenKrupp AG, and identifies and analyzes its peer group companies for comparative purposes.
What is covered in the chapter on valuation methods?
This chapter details the application of three valuation methods: DCF-Entity, DCF-Equity, and the Multiples method. Each method is applied individually to determine the value of ThyssenKrupp AG.
What is discussed in the critical assessment chapter?
This chapter provides a thorough evaluation of the strengths and weaknesses of each valuation method used, discussing the limitations and potential biases in the results obtained.
What does the conclusion cover?
The conclusion chapter summarizes the findings of the valuation analysis, presents the final valuation of ThyssenKrupp AG, and offers an outlook based on the results.
- Citation du texte
- Anonym (Auteur), 2017, Corporate valuation of the ThyssenKrupp AG. Estimating the economic value using the DCF Method (WACC), DCF Method (Equity) and Multiples Method, Munich, GRIN Verlag, https://www.grin.com/document/514858
